Syria: Unloved banks look to reform
Syrians don’t trust domestic banks. Many would rather deposit their cash in Beirut than entrust it to the locals. Reform has a long way to go. Meanwhile the government, undaunted by the weak financial infrastructure, is proposing the establishment of a stock exchange.
It is often said that for financial services Lebanon is to Syria what Hong Kong has been to China. The Syrian government might not like it, but it is self-evident that Beirut is the financial centre of choice not just for Syrian businesses but also for thousands of Syrian individuals who simply don't trust the domestic banking industry.
"Theoretically," says one economist, "it is illegal for Syrians to have bank accounts in Lebanon. But if you believe the unofficial figures saying that only 5% of Syrians actually have bank accounts in Syria, it is pretty obvious that the vast majority of those that do have accounts have them in Lebanon. The government tends to turn a blind eye because if Syrians are to have overseas bank accounts, the authorities would much rather they had them in Lebanon than anywhere else."
Quite how much Syrian cash is channelled through the Lebanese banking system, which is an attractive home for deposits because of the country's bank secrecy laws, is a matter for speculation. But as one economist points out, total assets in the Syrian commercial banking system amount to about $12 billion in a country with a population of 17 million.